Surge in MBS spending predicted: Report

Medicare funding is expected to rise by a quarter in real terms over the next decade, according to research published in the 2023 Intergenerational Report this week.
 
In the sixth report in the series released by the Treasury, analysts say that Medicare spending is going to rise in real terms – and while the increase in the bulk billing incentive is predicted to make a difference, it will only account for a small proportion of the rise, they believe.
 
In 2022–23, MBS spending stood at $1050 per capita, according to the report. That is expected to rise by around a quarter in real terms, after adjusting for inflation, to about $1300 per capital in 2033–34.
 
Of that rise, an increase of around three percentage points is attributed to the tripling of the bulk billing incentive, which was announced in the Federal Budget in May and is due to begin on 1 November.
 
More broadly than the MBS, health expenditure as a proportion of GDP is predicted to increase more than any other sector over the next 40 years, the researchers predict.
 
Currently standing at 4.2% of GDP in total, health spending will stand at 6.2% of Government spending by 2062–63 they believe, largely due to shifting demographics as people live longer and spend more years in poor health.
 
The report also suggests the amount of people aged 65 and over will more than double in that time, while Australian residents aged 85 and older will more than triple in number.
 
Researchers also highlighted the disproportionate amount of health spending on people aged 65 or older, who currently make up around 16% of the population and account for around 40% of total health expenditure.
 
‘From 2022–23 to 2062–63, real total health spending on those aged over 65 years is expected to increase around six-fold,’ the authors wrote.
 
‘Over the same period, real total health spending on those over 85 years is expected to increase around nine-fold.’
 
The report does suggest there is likely to be an ongoing focus on preventive health, but notes this is subject to change.
 
‘Spending on different components of Australia’s health system will grow at different rates over time, in the short and medium term,’ it notes.
 
‘These differences reflect a range of factors including advances in medical technology and policy choices [for example, in periods with a greater focus on preventive health].
 
‘History suggests these differences are unlikely to remain consistent over the long term.’
 
Within the same report is also a reminder of the fallibility of long-term predictions. Its authors point out that both the proportion of the population aged over 65 and health expenditure as a proportion of GDP in 2022 fell below the 20-year projections of the first Intergeneration Report in 2002.
 
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